The his4-912 delta mutation is an insertion of the long terminal repeat (delta) of the yeast retrotransposon Ty into the HIS4 promoter region, such that the delta is 97 base pairs upstream of the HIS4 transcription initiation site. Strains carrying the his4-912 delta allele are His- at 23 degrees C; this phenotype can be reversed either by growth at 37 degrees C or by mutations in trans-acting SPT genes. Under conditions in which his4-912 delta confers a His- phenotype. HIS4 transcription initiates at the delta initiation site, rather than at the HIS4 initiation site, producing a longer, nonfunctional transcript. Under conditions in which the strain is His+, transcription initiates at the wild-type HIS4 initiation site. To understand how transcription is balanced between the delta and HIS4 promoters, we have selected for cis-acting suppressors of his4-912 delta. Two classes defined by six independent mutations restore synthesis of a functional HIS4 transcript. The first class is an A-to-G base change 1 base upstream of the proposed delta TATA sequence. These mutants do not synthesize the delta-initiated transcript; instead, they synthesize only the wild-type HIS4 transcript. The second class of mutations alters base pairs surrounding the functional HIS4 TATA sequence. The two strongest His+ mutants of this class synthesize the wild-type HIS4 transcript at levels consistent with their His+ phenotype. Surprisingly, these two mutants also have a reduced level of the delta-initiated transcript relative to the his4-912 delta parent. Analysis of these mutants indicates that the level of transcription from one promoter can affect the level of transcription from the other promoter and suggests that delta and HIS4 transcription signals compete for initiation of transcription from each site.